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Reebok Case Study(2)

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Founded in England in 1895 as J.W. Foster and Sons, a manufacturer of track shoes Renamed Reebok in 1958 North American distribution rights purchased by Paul Fireman in 1979 Fireman and a few investors bought the parent company in 1984

First products Fireman imported to the U.S. were three models of high-end running shoes 1982 introduced The Freestyle,first shoe for aerobics, and first athletic shoe targeted at women Ushered in rapid growth for Reebok as running mania subsided Firm ranked top among major U.S. firms in sales growth, earnings growth & return on equity 300 different shoes in 10 categories by 1988.

Net Sales1200



600 Net Sales 400


0 1983 1984 1985 1986 1987

At the same time, company began diversifying into other products Aerobic shoes dropped in share of total shoes produced from 56% to 29%

Converse, 8.10%

Reebok, 32.20% Others, 30.90%

Nike, 18.60% Asics Tiger, 2.20% Aviva, 2.30% Adidas, 5.70%

Ability to respond to consumers needs & desires High brand recognition 1987 survey: 95% of athletic shoe owners were aware of Reebok v. 57% two years prior Unaided awareness of Reebok doubled between 1985 and 1987 Compared with a drop by Nike on the same measure 57% of teens dubbed Reebok the in shoe (38% for Nike)

Market penetration 52% had ever owned Reeboks (70% of the teens) 45% were Reebok owners higher than any other brand (customer retention is easier than acquisition)

High brand loyalty 2 out of 3 consumers who last purchased Reebok intended to make Reebok their next purchase Reebok owners more likely to purchase athletic shoes at regular price than non-owners

Access to retailers through its direct distribution strategy Add value by traveling the U.S. teaching retailers and consumers about the products features and benefits

Well equipped to handle future supply shortages (like the ones in 1987) by manufacturing in multiple countries

Could not sustain its image as an aspirational


Entire market study is primarily targetted in

the US.

ReebokInformation Source Coach or instructor Salesperson Article in magazine Advertisement Total Users 69% 64 53 52 43 Non Users 74% 65 54 48 47

Friend or relative 72% 65 54 50 45

Weekend warriors use their shoes for sports but are not zealous athletes Casual wearers use athletic shoes only for street-wear Largest segment: 80% of sales Demand comfort and style Serious athletes- Smallest segment, perceived by industry analysts to be opinion leaders for both of the other segments

Category advertising A variety of communications to promote specific product lines Reeboks let U.B.U. umbrella advertising Stress freedom of expression and individuality to rekindle the vitality of the Reebok name while maintaining the brands mass appeal Olympics advertising Associate Reeboks with sports to excite brand dealers Energy Return System (ERS) Performance-based print campaign to reach active sports participants

Increasing costs of Far East production puts pressure on margins Retailers narrow selections to fewer brands Shorter athletic shoe product life cycles Competition intensifies in all categories Shift in the way Reebok wearers talk about their shoes

A world concert tour conceived by AI Aimed at developing Human Right Awareness worldwide. Telephonic Survey of 1000 US nationals ordered by Reebok to identify attitudes towards AI

Objective is to reach young people with a positive message about Reebok Nature of the event The most exciting event of the year Mass pre-event, event, and post-event exposure expected

18 concerts in 16 countries on 5 continents Extensive advertising, promotions, and public relations planned

Nature of the event As the sole underwriter of the tour, the risks are high $2M tour expenses + up to $8M tour deficit + $5M marketing = up to $15M / 1 Potential negative tour publicity AI has the final decision on most aspects of the tour Net profits from tour merchandise donated to AI

Nature of the event Reebok created a human rights department, thought to be the first among CSR initiative in the private sector Nike sales surpassed Reebok- need to do some thing different Marketing communication is not about whether to communicate , its about what, when and how to say it and to whom and how often President Jimmy Carter joins the Reebok Human Rights Board of Advisors

Target Group for Reebok is geography independent and same true of the event. Demographically and psychographically events covers the entire target group Event offers sustained exposure to the brand as a social movement will remain in the minds of people who are a part of it for a long time Will reinforce perceptions of key brand image association with freedom & youth Enhance Corporate image as likeable company promoting social causes

Huge number of people going to be part of the event in different geographies in a very lively environment (music concert). The experiences created in an environment of youthfulness and dynamism will stay with them forever. Opportunity to entertain key clientsYouth Association leaders etc Merchandising opportunities

Direct tracking of sponsorship related activities: web data, call center data, online event statistics Quantitative Research: analytics to link sponsorship to brand awareness, sales & retention Qualitative analysis: on-site/in market, pre/post, participant/nonparticipant

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